Google AdWords – How Much Should You Spend?

How much should you spend on google adwords?

Google AdWords is the tool to use for your marketing campaigns if you are a small business owner. Our clients use Google’s powerful paid advertising tool all the time and have excellent results and ROIs.

Yes, Google AdWords works great for your campaigns and it’s definitely a thing you should include in your strategy. And one of the most important questions about AdWords we often get is: how much money should I spend on it?

The question often comes from business owners who want to start their paid advertising campaigns and want to know how much this strategy will set them back. There are two answers for this question. Let’s start with the first one:

The Test Budget

Before going ahead with Google AdWords, you should try to contain your costs and test what works and what doesn’t. Now, you are in testing mode, so it’s very important to do an extensive marketing research. There are no shortcuts at this stage. You should know everything about your market, your potential customers, your audience and how they can relate to you offer.

During the testing phase, your budget will go towards testing what ads work, how people react to them and what you should avoid in your main campaign. Now it’s the time to test your landing page, your sales letter and how people see your brand.

Your Test Budget – How Much Should It Be?

Generally, your test budget depends on the size of your future campaign. Calculate your budget by multiplying the number of keywords you want to target with the cost per click. Try to focus on getting at least 100 to 200 clicks to better understand how your visitors interact with your offer or products. Track your Marketing Campaign.

For instance, if you want to test 5 keywords (this is a bare minimum), at an average cost per click of $1, you should plan on a test budget of $500 to $1,000. The results from this test campaign will tell you a lot about your future main campaign. You’ll get data on which keywords work and which don’t, but also how your landing pages and ads work. This is where you get to do the “pruning” of your strategy – you should eliminate poor keywords, ineffective ads and bad landing pages. Obviously, keep only the winners for your main campaign.

As soon as your test campaign becomes profitable, ditch the budget – the sky’s the limit.

Successful campaigns and advertisers don’t stop their marketing campaigns. And the same goes with Google AdWords – a truly successful campaign doesn’t have a financial cap. This may sound ludicrous, but when you think about it, it’s a no-brainer: why would you stop a campaign that costs you $500 per day when you get $700 per day in return?

So, the answer to the question of how much should you spend on google adwords? would be something like: If you want to grow your business and see better results, more sales and more happy customers, you should never cap your AdWords budget.

Focus On ROI, Not Costs!

Excellent advertisers don’t focus on how much money they spend, they focus on results. Is this campaign making me money? How can I make it even more profitable? – these are the questions you have to focus on as an advertiser.

You’d be amazed, but successful advertisers actually focus on how to spend more money on their Google AdWords campaigns. As long as they are profitable, an advertiser shouldn’t worry about spending more than $100,000 every month on their campaign. In fact, these advertisers often want to spend even more to further grow their business.

So how can you get to the point where you have to scale up your Google AdWords campaign?

EPC vs. CPC

A lot of advertisers focus only on lowering the cost per click for their campaigns. Of course, paying as little as possible for your links is OK, but you should also focus on your earnings.

Simply put, you should focus on EPC (earnings per click) in order to dominate your market. This is where the most important players fight – and it’s where you can outbid your competitors. If your EPC is high, you’ll get more customers, more sales and more visitors to your offers – this is the way to really win the Google AdWords game.

Calculating your EPC

You can find out where your EPC stands by multiplying your conversion rate (how many people become paying customers) by your customer value (how much money you earn for each customer, minus fulfillment or operational costs).

For instance, if your average customer spends $200 on your products or services, and you have a 2 percent conversion rate, your EPC is $4.00. This is an excellent EPC, and it means you can advertise using keywords which have a CPC under $4.00, and still be profitable.

This will grow massively if you decide to expand your advertising campaign or Digital Strategies in the future, because these numbers act as multipliers. The traffic grows exponentially and you’ll essentially have a TON of potential customers seeing your offer. This is why focusing on EPC is the real secret of Google AdWords.

Looking for help with your Google AdWords campaign? Looking to find out how much should you spend on google adwords yourself?We are here to help you! Contact us at: info@smdigitalpartners.com